Gutting IRS Will Do Little but Allow Wealthy Tax Cheats to Thrive

The efforts of President Donald Trump and the Department of Government Efficiency to slash the IRS have jeopardized the agency’s ability to fairly enforce the tax code and undermined its capacity to provide helpful and timely customer service.

The attacks on the IRS are a calculated effort to cripple one of the government’s most essential functions: fair and effective tax enforcement. A May report from the Treasury Inspector General for Tax Administration shows that the IRS has lost thousands of employees since Trump took office, and most have been concentrated within the agency’s auditing and tax collection teams.

As of February, approximately 103,000 people worked at the IRS. Many of these hires were brought on in the last few years after an initial injection of funding from the Inflation Reduction Act allowed the agency to add capacity for the first time in decades.

Since then, the Trump administration has terminated about 11,500 employees, or 11% of the total IRS workforce, through the “deferred resignation program” and the mass firing of probationary employees. Approximately 60% of these losses were employees focused on tax enforcement—nearly one-third of the IRS’s total auditing capacity. Though some probationary employees have been asked to return to work, these staff may not be safe from further action.

In March, a human resources officer at the Treasury Department admitted that any reinstated probationary employees would just be included in future rounds of layoffs, or otherwise incentivized to leave the agency. Losing these staff will translate directly into weakened tax enforcement and rob the federal government of revenue at a moment when the proposed Republican tax bill would add as much as $3.8 trillion to the deficit over 10 years.

The erosion of IRS capacity creates fertile ground for tax avoidance, especially by the wealthiest taxpayers and corporations, which can afford to run out the clock on an underfunded and understaffed tax administrator. The largest corporations have already been doing so. Just recently, seven companies (including Merck & Co., Apple Inc., Walt Disney Co., and Amazon.com Inc.) announced they’ve pocketed nearly $1.4 billion collectively in would-be tax revenue they collectively owed in prior years when the IRS was too resource-constrained to hold them accountable.

The recent staff cuts at the IRS mean more companies will be able to siphon would-be tax dollars back into their own coffers. Going forward, estimates suggest that low enforcement capacity at the IRS could mean that 25 of the largest corporations pocket more than $20 billion per year in taxes that they legally owe.

For individual taxpayers, an anemic IRS will translate to worse or fewer government services. In future years, the IRS will collect less revenue owed, which will compound Congress and Trump’s proposed impending cuts to Medicaid, food assistance, and other core federal programs.

Recent estimates from the Yale Budget Lab suggest that the US could lose between $395 billion and $2.4 trillion over 10 years if the IRS shrinks by 50%—a threshold the Trump administration is reportedly aiming for. Everyday Americans will keep paying their fair share but get less in return.

The effect of IRS staff losses on enforcement and revenue collection isn’t the only harbinger of doom for taxpayers. As TIGTA notes, sizable portions of the teams specifically responsible for helping individual and small-business taxpayers have also been terminated.

In 2022, when the agency had about 84,000 employees, phone wait times were as high as 28 minutes and the IRS’s “level of service” (the percentage of taxpayer phone calls answered) was just 15%.

By filing season 2024, after the IRS had hired more than 15,500 additional employees, including 5,000 additional telephone assistors, phone wait times had plummeted to just three minutes, and level of service hit 88%.

The Trump administration’s IRS cuts will mean future delays in getting returns processed and refunds out the door, longer wait times on IRS phone lines, and taxpayer questions going unanswered.

These customer-facing employee losses come alongside other DOGE-induced cuts to customer service tools and resources, including the closures of dozens of brick-and-mortar Taxpayer Assistance Centers around the country and the Trump administration’s pending discontinuation of Direct File, the online tool that allowed taxpayers to file their taxes directly with the IRS for free.

The Trump administration isn’t close to done with its attacks on the IRS, but when it finishes, the agency will have a lot of rebuilding to do. Taxpayers will be counting on it.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Emily DiVito is the senior adviser for economic policy at Groundwork Collaborative. She previously was a policy adviser at the Treasury Department.

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